NIKE CASE STUDY 1. Why is it important to estimate a firm’s cost of capital? What does it represent? Is the WACC set by investors or by managers? Weighted average cost of capital or WACC represents the overall cost of capital in the company. It takes into considerations cost of debt and cost of equity. As company’s value can grow by increasing its assets that could be financed either be debt or equity and cost of capital shows how much it costs to do that. Cost of capital is a very important component
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calculation? Why or why not? 2. If you do not agree with Cohen’s analysis‚ calculate your own WACC for Nike and justify your assumptions. 3. Calculate the costs of equity using CAPM‚ the dividend discount model‚ and the earnings capitalization ratio. What are the advantages and disadvantages of each method? 4. What should Kimi Ford recommend regarding an investment in Nike? 2 Case Overview Nike‚ Inc. NorthPoint Group Investment Decision Current share price of USD 42.09 Declining market share
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provide suggestions to boost revenue. The targets provided by management included long-term revenue growth of 8-10% and earnings growth above 15%. Kimi Ford‚ a portfolio manager at NorthPoint Group has been tasked with analyzing Nike and coming up with a valuation for Nike so that her company can decide whether it is a good investment or not. She found that at a discount rate of 12% the company is overvalued‚ while with a slight decrease in the discount rate‚ to 11.7% the company is undervalued. In
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Ethics For Nike‚ labor and human rights continues to be a top priority and corporate concern. Ethics is essential in crisis communication. Nike’s sweatshop labor crisis demonstrates the importance of ethics. To defend its practices and public reputation during this crisis‚ Nike responded to allegations in ethical ways‚ employing truthfulness and transparency‚ disclosing their corporate social responsibility statements‚ including a fair employee treatment and a labor report‚ and commissioning
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200607-MM-Case-Assignments.doc 1/9 Multinational Management –Case Assignments Case Studies & Case Assignments General Remarks • • • The following questions are to be considered as “guiding questions”. That is‚ these questions will stimulate discussion within each group. However‚ groups are encouraged to use a managerial and problem-oriented framework (see “Notes on Case Analysis”) for their presentations and integrate conceptual thinking as much as possible (evidence of some wider
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NIKE - Organisational Changes NIKE‚ Inc. (NYSE: NKE) announced today that Charlie Denson‚ NIKE Brand President since 2006 and a 34-year veteran of the brand‚ will retire in January 2014. In conjunction with Denson’s decision to retire‚ the Company also announced strategic changes in its executive management team as part of the Company’s long-term organizational strategy to align the business to continue to drive growth. The changes reflect the Company’s focus on the consumer by accelerating innovation
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The company of Nike started in 1962 as Blue Ribbon Sports. It focus on athletic running shoes and was popular in the U.S. Guarding famous athlete as a spokesperson made Nike achieve great success. In 1985‚ the Air- Jordan basketball shoes create over $100 million profit and $20 million are using in the ads of “Just do it” which became the campaign ad in 1988. As Nike began to expand overseas market in Europe‚ the new sponsor Brazilian team which is the World Cup campaign had changed the Nike’s image
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INTRODUCTION Management information system is used for businesses like hotels ‚ restaurant and other establishment for them to make their job easy and to minimize the time they work for their business. Most big chains today have system . Each provides a suite of applications to assist the stores managers in business forecasting inventory management and human resources management. Such system alert managers potential problems and are networked with headquarters to enable the company to
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strategies that Nike has created in tandem with the Football World Cup. The report examines the performance of Nike in relation with the Football World Cup and also tried to find out whether there were any alternatives to get an even better result. In this report I also compared Nike with its closest competitor‚ Adidas and evaluated the critical differences between these two organizations based on the marketing strategies that they have adopted to become successful. 1. Introduction Nike is the leading
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analysis assumes Nike debt is trading at par – it is not ▪ Equity should be based on market value‚ not book value ▪ Hence total will be based on market cap.‚ not balance sheet ▪ Her debt cost is wrong ▪ She should use the current or projected cost rather than a historic one ▪ i.e. use a Bloomberg terminal (other terminals are available) to research yields on debt of the same credit rating as Nike ▪ It is unlikely Nike has a cost of
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